A TCI Book Review

The Butterfly Customer - Capturing the Loyalty of Today's Elusive Consumer

Susan M. O'Dell and Joan A. Pajunen
John Wiley and Sons, Toronto, 1997

"Butterfly customers" are defined by O'Dell and Pajunen to be people that flit from one store or supplier to another, always searching for a lower price or a different shopping experience. They have no loyalty to any particular store, and are always in search of a better deal or a new promotion.

"Constantly in motion for the best deal, the greatest choice, the latest trend, this creature selects a store or brand apparently at random, often abandoning the tried and true for the newest, the closest, the cheapest.

It's exhausting to be a butterfly and disheartening to serve one. There isn't one single store that captures all of their interest, dollars or oh-so-precious time. Consumers have been transformed from loyal, reliable and predictable patrons into transients - here today, flitting across the street tomorrow." (p. 1-2)

Butterfly customers have been spawned by the proliferation of options in the retail environment, in the last few decades, including suburban shopping malls that pulled people away from traditional downtown retail and service environments, and national chains of specialty stores that can take advantage of huge purchasing power to obtain the lowest prices for consumers. This is compounded by the fact that many consumers no longer trust retailers and service providers to deliver what they say they will, and to live up to expectations.

According to the authors, there are eight characteristics of Butterfly Customers:

they will readily accept offers to be loyal customers (through signing up for club memberships, points programs, etc.) but these programs will not truly create loyalty
they move across market segments, buying a luxury car one day and waiting in line to save $1 on a pair of socks the next
they are intelligent, educated and informed
they are cynical and skeptical, tending to disbelieve advertising messages and always reading the fine print
they would rather switch than fight - "The current reduction in customer complaints has less to do with a great improvement in service than it does with a collective shrug. What energy the Butterfly Customer does have is devoted to switching, not fighting." (p.8)
they are endlessly interested in the experience of others, and word of mouth is seen to be the most trusted and reliable source of information
they are not embarrassed to be Butterflies, and see this pattern of behaviour as being praiseworthy in today's economy
they know their own worth

"It's a wonderful time to be a Butterfly as retailers and service providers everywhere strive to entice this elusive new breed of customer. Every day customers are bombarded with new concepts, new products and new services to try. And there are sales and special offers galore, all designed to lure prospective buyers from retailer to retailer, from bank to bank, from credit card to credit card, and from brand to brand looking to see what's new, what's better, what's different." (p.10-11)

From the business perspective, though, Butterfly Customers are expensive to win (as there are significant costs entailed in getting their attention in the first place), difficult to service (as they are highly demanding), and almost impossible to keep.

However, all is not lost for the poor retailer....At the other end of the spectrum, the authors propose the concept of the "Monarch", a loyal customer who will return again and again because he or she trusts the retail or service operation and knows that what they expect will be what will be delivered.

"The Monarch is still a butterfly. The characteristics we described earlier still describe them. They are intelligent, curious, suspicious, and know their own worth. But the Monarch is a species of butterfly which, despite taking various byways and pathways, can be counted on to return to the familiar on a regular basis.

These loyal Monarch Customers are less expensive to attract. It usually doesn't take an expensive advertising campaign or give-away promotion to entice them back to your business. They take less transaction time from your staff and are quicker to buy because they are less skeptical and don't need a large amount of convincing. They are more willing to buy and less price sensitive all around." (p.35-36)

The authors describe five characteristics of Monarchs:

Monarchs always return - sooner or later
Monarchs often send someone in their place (i.e. recommending and referring other customers)
Monarchs always have an opinion - unlike the disinterested Butterfly customers who would rather switch than fight, Monarch customers always have an opinion that they will share if asked
Monarchs share their homework, and will freely provide information on what the competition is doing
Monarchs are forgiving and giving: "Monarch customers have a remarkable tolerance for the sheer ordinariness of service life. They know the coffee won't always be at exactly the right temperature and even the perkiest of airline attendants sometimes has a bad day. Customers who are loyal put elasticity in their transactions with you. They allow you to screw up once in a while and often even pitch in to help when the going gets rough." (p.39)

So, the big question becomes how do you create Monarchs from Butterflies (or, on the other side of the coin, how do you prevent your existing loyal Monarchs from abandoning you and becoming Butterflies)? O'Dell and Pajunen maintain that it boils down to building (or re-building, as the case may be) trust with the customer.

They propose the idea of the 'service kaleidoscope' - a three dimensional way of looking at a business to determine the extent to which it breeds trust in the customer. These three dimensions are:

the media dimension
the physical dimension
the people dimension

If the three dimensions are in harmony with one another, then the customer knows what to expect (and gets it), and develops a feeling of trust with the business. If the three dimensions are out of synch, then a feeling of discomfort and distrust will develop.

So, for example, if the media message about a retail environment suggests that offers upscale and quality merchandise, yet the physical surroundings suggest 'bargain warehouse' and the staff are surly and untrained, the customer will experience dissonance and not trust the business. (In O'Dell and Pajunen's terms, their "trust account" will be depleted.) They likely won't be back, having turned into a Butterfly Customer for someone else. Loyal Monarch Customers can be found in those environments where the three dimensions are in accord and support one another.

The authors have developed a self assessment tool for a business (which they call a '3-D audit', as it focuses on these three dimensions) and much of the book outlines the questions to be asked and procedures to be followed in undertaking this kind of assessment.

Another fundamental point that they make is that there needs to be another kind of three-dimensional harmony in place for a retail or service business to work - this time between the managers, the employees and the stockholders. This underscores for them the importance of leadership in creating the kind of environment that customers will trust - as this will create profits for the business, jobs and wages for the employees, and a return-on-investment for the equity owners.

One interesting point of contention for the authors that they deplore frequently throughout the book is the 'service excellence' feats that some other writers have lauded as examples of outstanding customer service (the sort of thing where a hotel front desk clerk charters a plane to return a briefcase that a guest has left). They say that these sorts of things are merely silly stories that raise expectations among consumers, but ultimately only end up costing everybody more (after all, somebody had to pay for that flight, most likely subsequent customers through prices that had to be raised to pay for all these feats of service heroism).

The Butterfly Customer is an interesting (if somewhat lightweight) book, with undoubtedly several good ideas about improving retail and service offerings to attract more loyal customers. Whether it really is as possible as they seem to suggest to create and keep loyal customers in this era of ever-proliferating consumer options is an open question at this point.

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